A New Agenda for Tough Times

It has been 13 years since a Democratic president's signature on the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 eliminated a flawed program that also provided the only protection against destitution. Yet that act also brought an end to the welfare wars, a long and debilitating period in which poor people were the focus of political conflict and racially loaded demagoguery, exemplified by former Sen. Phil Gramm's image of a society divided between those "pulling the wagon" and those "riding in the wagon." Even liberals stepped with trepidation, insisting that they, too, would end welfare as we knew it.

In the years since, absent a high-profile conflict over policy, poverty has once again become invisible. As Michael Harrington wrote in 1962, "That the poor are invisible is one of the most important things about them." But there is a sense that the shadows are lifting. Hurricane Katrina's devastating effects on New Orleans and the Gulf Coast briefly drew into sharp relief the fragility of life for poor families, as well as the inescapable racial dimension of poverty. The Center for American Progress put forward a major initiative in 2007, outlining a goal of cutting poverty in half over 10 years, which showed that mainstream Democrats were no longer on the defensive.

John Edwards sought to inject poverty into the agenda of the 2008 presidential election, and the ascent to the White House of an African American who had worked as an organizer in low-income communities, and whose campaign drew millions of poor Americans out of political quiescence, holds out the possibility that the conditions are right to once again "discover" poverty, as we do every few generations. While the economic crisis of the middle class has overshadowed much else, it has also made poverty a realistic worry for many who thought they were safely outside its grasp. The distinction between "the poor" and everyone else, or the deserving and undeserving poor, which reinforces the vicious polarization encouraged by politicians like Gramm, is no longer tenable. We are all in this together.

But even while poverty has been off the political agenda--perhaps even because it has been off the agenda--these have been years of quiet experimentation and fresh thinking when it comes to poverty policy. For example:

Strategies to help poor families build assets, both for long-term security and to take advantage of economic opportunity, expanded from vague academic dreams to full-fledged experiments supported by foundations and government. The federal Assets for Independence program has provided matching funds to over 43,000 participants over 10 years.

Welfare reform coincided with an economic boom in the late 1990s, which gave states unprecedented financial resources to concentrate on helping former welfare recipients move into the labor market and stay there. But while labor-market participation was higher, wages for lower-income workers stagnated. Income for the bottom 20 percent of households rose 11 percent from 1979 to 2006, while the richest 1 percent made two and a half times what they earned 30 years ago.

Federal and state improvements in child-support enforcement brought more cash into poor single-parent families. Policy-makers also realized that the economic circumstances of poor fathers not living with their children have a significant impact on the well-being of children and women. Projects to support fathers and increase their income enjoyed support from the left and right as well as particularly strong support among African American leaders, including the current president.

A concerted national effort to reduce teen pregnancy and childbearing led to significant progress during the 1990s. Teen pregnancy was reduced by 38 percent, and the birth rate for teens dropped by a third in that time. But in 2005, the rates began to creep back up, signaling a failure, at least in part, of the Bush administration's abstinence-only programs.

By expanding eligibility for the Earned Income Tax Credit, Medicaid, and other safety-net programs, the basis of public benefit programs was shifted subtly from need to work. Conservative scholar Douglas Besharov warned in 2002 that this shift amounted to "a startling expansion of the welfare state" and that "new welfare" would be "bigger and, for its supporters, better than ever. It is billions of dollars and millions of recipients larger--and it enjoys much broader public support because it is tied to 'working families.'"

Meanwhile, however, parents without the ability or opportunity to work full time, year round faced more restrictions on their ability to pursue education and training. "New welfare" programs lifted 14 million people above the poverty line but were less effective at reducing deep poverty than were older programs, as shown by the rise in the number of children living below half the poverty line--2.4 million in 2005, a million more than a decade earlier.

As a result of these silent but dramatic shifts, we have a set of policies and circumstances relating to poverty and poor families that are as different from the policies of the late 1980s as those of the Great Society were from the decades previous. In many ways, these are policies designed to help people build their economic capacity when the economy is growing. They live up to the rhetorical calls for a "ladder" or a "trampoline" to replace the "safety net." Welfare reform, for example, was perceived as a great success in the economic boom of the late 1990s. But we shouldn't design anti-poverty policies for good times, when poverty is a relatively small problem in the midst of affluence, but for times when they will be put to the test by rising economic hardship. And the current economic crisis will provide a strenuous natural test of these newer initiatives.

As Alan Jenkins writes in this report, the federal response to the severe recession--the economic stimulus package enacted in February--included a surprising array of little-noticed provisions to expand economic opportunity. While much work needs to be done to ensure that this reinvestment actually boosts the economic capacity of those left behind even in good times, it has been decades since the federal government moved so aggressively to extend economic opportunity to the poor.

But money and economic opportunity are not the only answers to poverty. We have come a long way from the days when John F. Kennedy's economic adviser, Walter Heller, could treat the problem as a matter of setting a poverty threshold and calculating how much money it would take to bring every poor household above it. It is no longer possible to deny that expectations, incentives, structural racism, neighborhood, schooling, family structure, and many other factors are deeply intertwined with poverty, particularly with its intergenerational cycle. But knowing that doesn't make it any easier to solve. In fact, the complexity of these intertwined factors, and the context of relentless economic disruptions, makes it far too complicated for anyone to start a sentence with "The key to reducing poverty is ...."

The last decade has brought tremendous experimentation to these complex questions, including successful initiatives toward asset-building; cash incentives to encourage good behavior; initiatives to encourage social, racial, and economic mobility and integration; interventions to rebuild community; and supports for the working poor and childless workers. Some or all of these initiatives, as they show success, should be brought to scale so that they reach more than one city, one community, or one subpopulation. The core of this special report will assess these initiatives, their successes and limitations, the potential choices to be made among them, and the steps that can be taken to deepen their impact.

The challenge is to develop a set of policies that are suitable to both good times and bad and that provide both opportunity to help poor people get into the mainstream of the economy and security against the harsh disruptions of that economy and of life in general.

Apart from finding the right mix of policies, it will be necessary to bring these new ideas out from behind the curtain and rejoin the political fight. There are limits to what can be achieved invisibly, through the subtle changes that created the work-based safety net or through the quick enactment of the economic stimulus. We may not be ready to declare a new national "War on Poverty" at a time when all Americans feel economically vulnerable, but prioritizing poverty reduction, even without the misleading "war" metaphor, is both necessary and a political challenge. Great Britain provides an example of how anti-poverty efforts have proved politically successful, in part by setting a measurable goal so that policies can be evaluated. The election of Barack Obama, along with the sense of solidarity and shared vulnerability created by the recession, may allow a political reframing of poverty as part of a broader vision of a new social contract.